Karnataka Bank Raises Rs 600 Crore Through QIP: Bolsters Growth and Stability

Karnataka Bank has successfully concluded a Qualified Institutional Placement (QIP) to raise Rs 600 crore, adding to its planned capital raise program of Rs 1,500 crore announced in September 2023. This strategic move aims to enhance the bank’s financial strength, fueling its growth trajectory while ensuring stability.

Key Points

1. QIP Details

   • The QIP, initiated on March 21, 2024, concluded on March 27, 2024.
   • Total of 2,64,31,718 equity shares were allotted at a price of Rs 227 per share, resulting in an issue size of approximately Rs 599.99 crore.
   • The issue price of Rs 227 represents a discount of 1.91% to the floor price of Rs 231.43 per share set for the QIP issue.

2. Utilization of Proceeds

   • The raised capital, along with previous preferential issues, will be utilized to cater to the expanding business needs of the bank, ensuring sustainable growth.

3. Allotment Details

   • HSBC Mutual Fund emerged as the largest allottee, securing a substantial 25% allocation.
   • Other significant allottees include SBI Life Insurance Company, Franklin India Smaller Companies Fund, Max Life Insurance Company, Morgan Stanley Asia Singapore PTE, and HSBC Global Investment Funds.

4. Strategic Advisor and Managers

   • NovaaOne Capital acted as the sole advisor to the entire capital raise of Rs 1,500 crore.
   • Ambit and Avendus Capital served as the book running lead managers for the QIP, facilitating its successful execution.

5. Partnership with ICICI Lombard General Insurance

   • Karnataka Bank has entered into an agreement with ICICI Lombard General Insurance Company to distribute their general insurance products, expanding its product portfolio for customers.

6. Financial Performance

   • In Q3 FY24, the bank witnessed a standalone net profit of Rs 331.08 crore, marking a notable increase from Rs 300.68 crore in Q3 FY23.
   • Net sales stood at Rs 2,438.69 crore in Q3 FY24, demonstrating a robust year-on-year growth of 18.7%.

By strategically augmenting its capital base and forging key partnerships, Karnataka Bank is poised for sustained growth and value creation in the dynamic banking landscape.